The government’s top socioeconomic and finance planning managers just made a welcome announcement that revived hopes the country’s priority infrastructure projects may soon rise from the ground and serve the public’s most urgent need during the term of this administration.
The Duterte government, which had set aside the previous regime’s Public-Private Partnership (PPP) mode for project implementation in favor of official development assistance (ODA), announced this week it is open to partnerships with the private sector on the big-ticket infrastructure projects under its “Build, Build, Build” program.
Funding projects through ODA has drawn criticism that such approach would push the country deeper into debt.
“People have been questioning us, why we are supposedly ‘abandoning the PPP.’ We are not abandoning the PPP,” the office of Finance Secretary Carlos Dominguez 3rd said in a statement issued on Tuesday.
Dominguez explained that the private sector “won’t be out of the loop” in taking part in large-scale infrastructure projects because the government would still need private contractors to continue implementing them.
Given the long wait for a clear government policy on the mode of implementation for the urgent projects, that announcement must be a relief for private investors in the industry to hear.
Socioeconomic Planning Secretary Ernesto Pernia explained that having reviewed the long delays in the big projects under the previous regime, the Duterte administration moved away from total reliance on the traditional PPP approach to financing. Instead, it has experimented with different modalities of financing and now stands open to a mix of funding sources – private, ODA and the national budget.
For its first experiment, Pernia said the Duterte administration has adopted a hybrid scheme in which it pours money first from ODA and the government appropriations in projects that will later be auctioned off to the private sector for operation and maintenance. Pernia said the first experiment using that modality was the construction of a new Clark International Airport terminal.
“So we have been telling the private sector that if you can come up with that kind of speed using PPP then we are willing to consider PPP projects again,” Pernia said in a speech at a Philippine Economic Society conference on Wednesday.
Additionally, Dominguez also delivered what must have been good news to advocates of unsolicited proposals from the private sector. The Finance chief said the government would consider unsolicited proposals for as long as these do not entail government subsidies or guarantees.
Businessmen such as Ricardo Penson, president and CEO of Ausphil Tollways Corp, a proponent of the P15-billion North Luzon East Expressway (NLEEx) project must welcome that piece of announcement.
It was Penson who pointed out during a business forum hosted by The Manila Times in August, “the value for money is there for a public-private partnership, but the greater value is in unsolicited proposals.” Stressing the strength of the private sector, Penson added: “We can accelerate, we can fast-track a project. We cannot keep going back to the very same people that created the problems and look up to them to solve the problems for us.”
The government has now refueled high hopes for its ambitious “Build, Build, Build” program to start and succeed for the long haul.
To sustain these hopes and keep public trust up, the government has only one way to go: finalize the most viable mode of financing for the big-ticket projects that will not add much to the mounting public debt, which as of September stood at P6.44 trillion, driven higher from the preceding month by domestic securities issuances. The administration must also complete construction and delivery of at least some of the projects starting next year until 2022.